Jun 30, 2014
1. Company overview
CES LIMITED (Formerly known as Serve All Enterprise Solutions Limited)
together with its subsidiaries (Collectively "the Company") is an
Information Technology (IT) and Information Technology Enabled Services
(ITES) provider, dedicated to serving the midsize market of global
enterprises.
2. Significant accounting policies
2.1 Basis of preparation of financial statements
The Consolidated financial statements are prepared in accordance with
Indian Generally Accepted Accounting Principles ("GAAP") under the
historical cost convention on the accrual basis. GAAP comprises
mandatory accounting standards as specified in the Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of the
Indian Companies Act, 1956. Accounting policies have been consistently
applied except where a newly issued accounting standard is initially
adopted or a revision to an existing accounting adopted or a revision
to an existing accounting standard requires a change in the accounting
policy hitherto in use. The management evaluates all recently issued or
revised accounting standards on an ongoing basis.
2.1a Principles of Consolidation:
The consolidated financial statements have been prepared on the
following basis:
The consolidated financial statements include the financial statements
of CES Limited and its subsidiaries CES USA Inc. (Wholly owned
subsidiary), CES Information Technologies Private Limited (70% owned).
The financial statements of the parent company and its subsidiaries
have been combined on a line by line basis by adding together the book
values of all items of assets, liabilities, incomes and expenses after
eliminating all intercompany balances/transactions.
Minority interest in the net assets of consolidated subsidiaries is the
amount of equity attributable to the minorities at the dates on which
investment in a subsidiary is made and the minority''s share of
movements in equity since the date of parent subsidiary relationship
came into existence.
2.2 Use of estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent assets and liabilities as at the date of the financial
statements and reported amounts of income and expenses during the
period. Actual results could differ from those estimates. Examples of
such estimates include provisions for doubtful debts, future
obligations under employee retirement benefit plans, income taxes, and
the useful lives of fixed assets and intangible assets. Management
periodically assesses using, external and internal sources, whether
there is an indication that an asset may be impaired. Impairment occurs
where the carrying value exceeds the present value of future cash flows
expected to arise from the continuing use of the asset and its eventual
disposal. The impairment loss to be expensed is determined as the
excess of the carrying amount over the higher of the asset''s net sales
price or present value as determined above. Contingencies are recorded
when it is probable that a liability will be incurred, and the amount
can be reasonably estimated. Where no reliable estimate can be made, a
disclosure is made as contingent liability. Actual results could differ
from those estimates.
2.3 Revenue recognition
Income from software services and products: Revenue from professional
services consist primarily of revenue earned from services performed on
a "time and material" basis. The related revenue is recognized as and
when the services are performed. The Company also performs time bound
fixed-price engagements, under which revenue is recognized using the
percentage of completion method of accounting. The cumulative impact of
any revision in estimates of the percentage of work completed is
reflected in the year in which the change becomes known. Provisions for
estimated losses on such engagements are made during the year in which
a loss becomes probable and can be reasonably estimated.
Revenue from the sale of user licenses for software applications is
recognized on transfer of the title in the user license, except in case
of multiple element contracts requiring significant implementation
services, where revenue is recognized as per the percentage of
completion method.
Interest income is recognized using the time proportion method, based
on the transactional interest rates.
2.4 Fixed Assets
Tangible assets
Tangible assets are stated at actual cost less accumulated
depreciation. The actual cost capitalized includes material cost,
freight, installation cost, duties and taxes, finance charges and other
incidental expenses incurred during the construction/installation
stage.
Intangible assets
Intangible assets are recorded at consideration paid for acquisition
and other direct costs that can be directly attributed, or allocated on
a reasonable and consistent basis, to creating, producing and making
the asset ready for its intended use.
Depreciation
Depreciation on the Tangible Fixed Assets of the Company is provided on
Straight line method on pro-rata basis and as per the rates specified
in the Schedule XIV of the companies Act, 1956 and there is no change
in the method of depreciation during the year. Individual assets
acquired for less than Rs. 5,000 are entirely depreciated in the year
of acquisition.
The cost of and the accumulated depreciation for fixed assets sold,
retired or otherwise disposed off are removed from the stated values
and the resulting gains and losses are included in the profit and loss
account. Lease payments under operating lease are recognized as an
expense in the profit and loss account. An impairment loss is
recognized wherever the carrying amount of the fixed assets exceeds its
recoverable amount.
2.5 Foreign Currency transactions and translation
Transactions in foreign currency are recorded at exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
denominated in foreign currency are translated at the rate of exchange
at the balance sheet date and resultant gain or loss is recognized in
the profit and loss account. Non- monetary assets and liabilities are
translated at the rate prevailing on the date of transaction.
Integral Operations:
Monetary assets and Liabilities are translated at the exchange rate
prevailing at the date of balance sheet. Non-monetary items are
translated at the historical rate. The items in the statement of profit
and loss are translated at the average exchange rate during the period.
The differences arising out of the transaction are recognized in the
statement of profit and loss.
Non-integral Operations:
Assets and liabilities are translated at the exchange rate prevailing
at the date of the balance sheet. The items in the statement of profit
and loss are translated at the average exchange rate during the period.
The differences arising out of the translation are transferred to
translation reserve.
2.6 Taxes on Income
Tax expense for the year comprises of current tax and deferred tax.
Income taxes are computed using the tax effect accounting method, where
taxes are accrued in the same period in which the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount being considered. The tax effect is
calculated on the accumulated timing differences at the end of the
accounting period based on prevailing enacted or substantially enacted
regulations. Deferred tax assets are recognized only if there is
virtual certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
2.7 Earnings per share
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extra-ordinary /
exceptional item is considered. The number of shares used in computing
basic earnings per share is the weighted average number of shares
outstanding during the period. The number of shares used in computing
diluted earnings per share comprises the weighted average shares
considered for deriving basic earnings per share, and also the weighted
average number of equity shares that could have been issued on the
conversion of all dilutive potential equity shares. The diluted
potential equity shares are adjusted for the proceeds receivable, had
the shares been actually issued at fair value (i.e. the average market
value of the outstanding shares). Dilutive potential equity shares are
deemed converted as of the beginning of the period, unless issued at a
later date.
2.8 Retirement benefits to employees
Gratuity
The Company provides for gratuity, a defined benefit retirement plan
covering eligible employees, based on actuarial valuation made by an
independent actuary as at the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the gratuity plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employees'' salary and the tenure of employment.
Provident Fund/ESI
Contributions to defined Schemes such as Provident Fund/ESI are charged
as incurred on accrual basis. Eligible employees receive benefits from
a provident fund, which is a defined contribution plan. Aggregate
contributions along with interest thereon are paid at retirement,
death, incapacitation or termination of employment. Both the employee
and the Company make monthly contributions to the government
administered authority.
2.9 Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset (including goodwill) may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognized in the profit and loss account. If at
the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount. An
impairment loss is reversed only to the extent that the carrying amount
of asset does not exceed the net book value that would have been
determined; if no impairment loss had been recognized.
2.10 Segment Accounting Polices
(a) Segment Assets and Liabilities:
The assets of the Company are used interchangeably between segments,
and hence the assets and liabilities of the Company are currently
treated as inseparable.
(b) Segment Revenue and Expense:
The Revenue and direct cost(including the payroll cost of all the
employees and consultants which can be attributed to the revenue),
excepting the unallocable costs like personnel cost for the supporting
services, depreciation, operating expenditure, interest income on
deposits, provision for contingencies and income tax, are directly
attributed to the respective segments.
2.11 Provision and Contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made. Provisions for
onerous contracts, i.e. contracts where the expected unavoidable costs
of meeting the obligations under the contract exceed the economic
benefits expected to be received under it are recognised when it is
probable that an outflow of resources embodying economic benefits will
be required to settle a present obligation as a result of an obligating
event, based on a reliable estimate of such obligation.
Jun 30, 2013
1. Company overview
CES LIMITED (Formerly Known as Serve All Enterprise Solutions Limited)
(The "Company") is an Information Technology (IT) and Information
Technology Enabled Services (ITES) provider, dedicated to serving the
midsize market of global enterprises.
2.1 Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the historical
cost convention on the accrual basis. GAAP comprises mandatory
accounting standards as specified in the Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Indian
Companies Act, 1956. Accounting policies have been consistently applied
except where a newly issued accounting standard is initially adopted or
a revision to an existing accounting adopted or a revision to an
existing accounting standard requires a change in the accounting policy
hitherto in use. The management evaluates all recently issued or
revised accounting standards on an ongoing basis.
2.2 Use of estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent assets and liabilities as at the date of the financial
statements and reported amounts of income and expenses during the
period. Actual results could differ from those estimates. Examples of
such estimates include provisions for doubtful debts, future
obligations under employee retirement benefit plans, income taxes, and
the useful lives of fixed assets and intangible assets.
Management periodically assesses using, external and internal sources,
whether there is an indication that an asset may be impaired.
Impairment occurs where the carrying value exceeds the present value of
future cash flows expected to arise from the continuing use of the
asset and its eventual disposal. The impairment loss to be expensed is
determined as the excess of the carrying amount over the higher of the
asset''s net sales price or present value as determined above.
Contingencies are recorded when it is probable that a liability will be
incurred, and the amount can be reasonably estimated. Where no reliable
estimate can be made, a disclosure is made as contingent liability.
Actual results could differ from those estimates.
2.3 Revenue recognition
Income from software services and products: Revenue from professional
services consist primarily of revenue earned from services performed on
a "time and material" basis. The related revenue is recognized as and
when the services are performed. The Company also performs time bound
fixed-price engagements, under which revenue is recognized using the
percentage of completion method of accounting. The cumulative impact of
any revision in estimates of the percentage of work completed is
reflected in the year in which the change becomes known. Provisions for
estimated losses on such engagements are made during the year in which
a loss becomes probable and can be reasonably estimated.
Amounts received or billed in advance of services performed are
recorded as advance from customers/unearned revenue. Unbilled revenue,
included in debtors, represents amounts recognized based on services
performed in advance of billing in accordance with contract terms.
Unearned revenue is calculated on the basis of the unutilized period of
time at the Balance Sheet and represents revenue which is expected to
be earned in future periods in respect of internet, e-mail services,
electronic data interchange and web hosting services.
Revenue from the sale of user licenses for software applications is
recognized on transfer of the title in the user license, except in case
of multiple element contracts requiring significant implementation
services, where revenue is recognized as per the percentage of
completion method.
Revenues are stated net of discounts and include expenses billed to the
customers. Interest income is recognized using the time proportion
method, based on the transactional interest rates.
2.4 Fixed Assets
Tangible assets
Tangible assets are stated at actual cost less accumulated
depreciation. The actual cost capitalized includes material cost,
freight, installation cost, duties and taxes, finance charges and other
incidental expenses incurred during the construction/installation
stage.
Intangible assets
Intangible assets are recorded at consideration paid for acquisition
and other direct costs that can be directly attributed, or allocated on
a reasonable and consistent basis, to creating, producing and making
the asset ready for its intended use.
Depreciation
Depreciation on the Tangible Fixed Assets of the Company is provided on
Straight line method as per Schedule XIV of the Companies Act, 1956 are
considered as the minimum rate. Individual assets acquired for less
than Rs. 5,000 are entirely depreciated in the year of acquisition.
The cost of and the accumulated depreciation for fixed assets sold,
retired or otherwise disposed off are removed from the stated values
and the resulting gains and losses are included in the profit and loss
account. Lease payments under operating lease are recognized as an
expense in the profit and loss account. An impairment loss is
recognized wherever the carrying amount of the fixed assets exceeds its
recoverable amount.
2.5 Foreign Currency transactions and translation
Transactions in foreign currency are recorded at exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
denominated in foreign currency are translated at the rate of exchange
at the balance sheet date and resultant gain or loss is recognized in
the profit and loss account. Non-monetary assets and liabilities are
translated at the rate prevailing on the date of transaction.
2.6 Taxes on Income
Tax expense for the year comprises of current tax and deferred tax.
Income taxes are computed using the tax effect accounting method, where
taxes are accrued in the same period in which the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
alternate tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of adjustments of future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal tax after the tax holiday
period. Accordingly, it is recognized as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Company and the asset can be measured reliably.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount being considered. The tax effect is
calculated on the accumulated timing differences at the end of the
accounting period based on prevailing enacted or substantially enacted
regulations. Deferred tax assets are recognized only if there is
virtual certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
2.7 Earnings per share
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extra-ordinary /
exceptional item is considered. The number of shares used in computing
basic earnings per share is the weighted average number of shares
outstanding during the period. The number of shares used in computing
diluted earnings per share comprises the weighted average shares
considered for deriving basic earnings per share, and also the weighted
average number of equity shares that could have been issued on the
conversion of all dilutive potential equity shares. The diluted
potential equity shares are adjusted for the proceeds receivable, had
the shares been actually issued at fair value (i.e. the average market
value of the outstanding shares). Dilutive potential equity shares are
deemed converted as of the beginning of the period, unless issued at a
later date.
2.8 Retirement benefits to employees
Gratuity
The Company provides for gratuity, a defined benefit retirement plan
covering eligible employees, based on actuarial valuation made by an
independent actuary as at the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the gratuity plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employees'' salary and the tenure of employment.
Provident Fund/ESI
Contributions to defined Schemes such as Provident Fund/ESI are charged
as incurred on accrual basis. Eligible employees receive benefits from
a provident fund, which is a defined contribution plan. Aggregate
contributions along with interest thereon are paid at retirement,
death, incapacitation or termination of employment. Both the employee
and the Company make monthly contributions to the government
administered authority.
2.9 Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset (including goodwill) may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount.
The reduction is treated as an impairment loss and is recognized in the
profit and loss account. If at the Balance Sheet date there is an
indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount. An impairment loss is reversed only to the
extent that the carrying amount of asset does not exceed the net book
value that would have been determined; if no impairment loss had been
recognized.
2.10 Segment Accounting Polices
(a) Segment Assets and Liabilities:
The assets of the Company are used interchangeably between segments,
and hence the assets and liabilities of the Company are currently
treated as inseparable.
(b) Segment Revenue and Expense:
The Revenue and direct cost, excepting the un allocable costs like
personnel cost for the supporting services, depreciation, operating
expenditure, interest income on deposits, provision for contingencies
and income tax, are directly attributed to the respective segments.
2.11 Provision and Contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made. Provisions for
onerous contracts, i.e. contracts where the expected unavoidable costs
of meeting the obligations under the contract exceed the economic
benefits expected to be received under it are recognised when it is
probable that an outflow of resources embodying economic benefits will
be required to settle a present obligation as a result of an obligating
event, based on a reliable estimate of such obligation.
Jun 30, 2012
1.1 Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the historical
cost convention on the accrual basis. GAAP comprises mandatory
accounting standards as specified in the Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Indian
Companies Act, 1956. Accounting policies have been consistently applied
except where a newly issued accounting standard is initially adopted or
a revision to an existing accounting adopted or a revision to an
existing accounting standard requires a change in the accounting policy
hitherto in use. The management evaluates all recently issued or
revised accounting standards on an ongoing basis.
1.2 Use of estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent assets and liabilities as at the date of the financial
statements and reported amounts of income and expenses during the
period. Actual results could differ from those estimates. Examples of
such estimates include provisions for doubtful debts, future
obligations under employee retirement benefit plans, income taxes, and
the useful lives of fixed assets and intangible assets. Management
periodically assesses using, external and internal sources, whether
there is an indication that an asset may be impaired. Impairment occurs
where the carrying value exceeds the present value of future cash flows
expected to arise from the continuing use of the asset and its eventual
disposal.
The impairment loss to be expensed is determined as the excess of the
carrying amount over the higher of the asset''s net sales price or
present value as determined above. Contingencies are recorded when it
is probable that a liability will be incurred, and the amount can be
reasonably estimated. Where no reliable estimate can be made, a
disclosure is made as contingent liability. Actual results could differ
from those estimates.
1.3 Revenue recognition
Income from software services and products: Revenue from professional
services consist primarily of revenue earned from services performed on
a "time and material" basis. The related revenue is recognized as and
when the services are performed. The Company also performs time bound
fixed-price engagements, under which revenue is recognized using the
percentage of completion method of accounting. The cumulative impact of
any revision in estimates of the percentage of work completed is
reflected in the year in which the change becomes known. Provisions for
estimated losses on such engagements are made during the year in which
a loss becomes probable and can be reasonably estimated.
Amounts received or billed in advance of services performed are
recorded as advance from customers/unearned revenue. Unbilled revenue,
included in debtors, represents amounts recognized based on services
performed in advance of billing in accordance with contract terms.
Unearned revenue is calculated on the basis of the unutilized period of
time at the Balance Sheet and represents revenue which is expected to
be earned in future periods in respect of internet, e-mail services,
electronic data interchange and web hosting services.
Revenue from the sale of user licenses for software applications is
recognized on transfer of the title in the user license, except in case
of multiple element contracts requiring significant implementation
services, where revenue is recognized as per the percentage of
completion method.
Revenues are stated net of discounts and include expenses billed to the
customers. Interest income is recognized using the time proportion
method, based on the transactional interest rates.
1.4 Fixed Assets Tangible assets
Tangible assets are stated at actual cost less accumulated
depreciation. The actual cost capitalized includes material cost,
freight, installation cost, duties and taxes, finance charges and other
incidental expenses incurred during the construction/installation
stage.
Intangible assets
Intangible assets are recorded at consideration paid for acquisition
and other direct costs that can be directly attributed, or allocated on
a reasonable and consistent basis, to creating, producing and making
the asset ready for its intended use.
Depreciation
Depreciation on the Tangible Fixed Assets of the Company is provided on
Straight line method as per Schedule XIV of the Companies Act, 1956 are
considered as the minimum rate. Individual assets acquired for less
than Rs. 5,000 are entirely depreciated in the year of acquisition.
The cost of and the accumulated depreciation for fixed assets sold,
retired or otherwise disposed off are removed from the stated values
and the resulting gains and losses are included in the profit and loss
account. Lease payments under operating lease are recognised as an
expense in the profit and loss account. An impairment loss is
recognized wherever the carrying amount of the fixed assets exceeds its
recoverable amount.
1.5 Foreign Currency transactions and translation
Transactions in foreign currency are recorded at exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
denominated in foreign currency are translated at the rate of exchange
at the balance sheet date and resultant gain or loss is recognized in
the profit and loss account. Non-monetary assets and liabilities are
translated at the rate prevailing on the date of transaction.
1.6 Taxes on Income
Tax expense for the year comprises of current tax, deferred tax.
Income taxes are computed using the tax effect accounting method, where
taxes are accrued in the same period in which the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
alternate tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of adjustments of future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal tax after the tax holiday
period. Accordingly, it is recognized as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Company and the asset can be measured reliably.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount being considered. The tax effect is
calculated on the accumulated timing differences at the end of the
accounting period based on prevailing enacted or substantially enacted
regulations. Deferred tax assets are recognized only if there is
virtual certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
1.7 Earnings per share
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extra-ordinary /
exceptional item is considered. The number of shares used in computing
basic earnings per share is the weighted average number of shares
outstanding during the period. The number of shares used in computing
diluted earnings per share comprises the weighted average shares
considered for deriving basic earnings per share, and also the weighted
average number of equity shares that could have been issued on the
conversion of all dilutive potential equity shares. The diluted
potential equity shares are adjusted for the proceeds receivable, had
the shares been actually issued at fair value (i.e. the average market
value of the outstanding shares). Dilutive potential equity shares are
deemed converted as of the beginning of the period, unless issued at a
later date.
1.8 Retirement benefits to employees Gratuity
The Company provides for gratuity, a defined benefit retirement plan
covering eligible employees, based on actuarial valuation made by an
independent actuary as at the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the gratuity plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employees'' salary and the tenure of employment.
Provident Fund/ESI
Contributions to defined Schemes such as Provident Fund/ESI are charged
as incurred on accrual basis. Eligible employees receive benefits from
a provident fund, which is a defined contribution plan. Aggregate
contributions along with interest thereon are paid at retirement,
death, incapacitation or termination of employment. Both the employee
and the Company make monthly contributions to the government
administered authority.
1.9 Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset (including goodwill) may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognized in the profit and loss account. If at
the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount. An
impairment loss is reversed only to the extent that the carrying amount
of asset does not exceed the net book value that would have been
determined; if no impairment loss had been recognized.
1.10 Segment Accounting Polices
(a) Segment Assets and Liabilities:
The assets of the Company are used interchangeably between segments,
and hence the assets and liabilities of the Company are currently
treated as inseparable.
(b) Segment Revenue and Expense:
The Revenue and direct cost, excepting the un allocable costs like
personnel cost for the supporting services, depreciation, operating
expenditure, interest income on deposits, provision for contingencies
and income tax, are directly attributed to the respective segments.
1.11 Provision and Contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made. Provisions
for onerous contracts, i.e. contracts where the expected unavoidable
costs of meeting the obligations under the contract exceed the economic
benefits expected to be received under it are recognised when it is
probable that an outflow of resources embodying economic benefits will
be required to settle a present obligation as a result of an obligating
event, based on a reliable estimate of such obligation.
Jun 30, 2011
1. Company overview
Serve All Enterprise Solutions Limited (The "Company") is an
Information Technology (IT) and Information Technology Enabled Services
(ITES) provider, dedicated to serving the midsize market of global
enterprises.
2. Significant accounting policies
2.1 Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the historical
cost convention on the accrual basis. GAAP comprises mandatory
accounting standards as specified in the Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Indian
Companies Act, 1956. Accounting policies have been consistently applied
except where a newly issued accounting standard is initially adopted or
a revision to an existing accounting adopted or a revision to an
existing accounting standard requires a change in the accounting policy
hitherto in use. The management evaluates all recently issued or
revised accounting standards on an ongoing basis.
2.2 Use of estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent assets and liabilities as at the date of the financial
statements and reported amounts of income and expenses during the
period. Actual results could differ from those estimates. Examples of
such estimates include provisions for doubtful debts, future
obligations under employee retirement benefit plans, income taxes, and
the useful lives of fixed assets and intangible assets. Management
periodically assesses using, external and internal sources,
whether there is an indication that an asset may be impaired.
Impairment occurs where the carrying value exceeds the present value of
future cash flows expected to arise from the continuing use of the
asset and its eventual disposal. The impairment loss to be expensed is
determined as the excess of the carrying amount over the higher of the
asset's net sales price or present value as determined above.
Contingencies are recorded when it is probable that a liability will be
incurred, and the amount can be reasonably estimated. Where no reliable
estimate can be made, a disclosure is made as contingent liability.
Actual results could differ from those estimates.
2.3 Revenue recognition
Income from software services and products: Revenue from professional
services consist primarily of revenue earned from services performed on
a "time and material" basis. The related revenue is recognized as and
when the services are performed. The Company also performs time bound
fixed-price engagements, under which revenue is recognized using the
percentage of completion method of accounting. The cumulative impact of
any revision in estimates of the percentage of work completed is
reflected in the year in which the change becomes known. Provisions
for estimated losses on such engagements are made during the year in
which a loss becomes probable and can be reasonably estimated.
Amounts received or billed in advance of services performed are
recorded as advance from customers/unearned revenue. Unbilled revenue,
included in debtors, represents amounts recognized based on services
performed in advance of billing in accordance with contract terms.
Unearned revenue is calculated on the basis of the unutilized period of
time at the Balance Sheet and represents revenue which is expected to
be earned in future periods in respect of internet, e- mail services,
electronic data interchange and web hosting services.
Revenue from the sale of user licenses for software applications is
recognized on transfer of the title in the user license, except in case
of multiple element contracts requiring significant implementation
services, where revenue is recognized as per the percentage of
completion method.
Revenues are stated net of discounts and include expenses billed to the
customers. interest income is recognized using the time proportion
method, based on the transactional interest rates.
2.4 Fixed Assets
Tangible assets
Tangible assets are stated at actual cost less accumulated
depreciation. The actual cost capitalized includes material cost,
freight, installation cost, duties and taxes, finance charges and other
incidental expenses incurred during the construction/installation
stage.
Intangible assets
Intangible assets are recorded at consideration paid for acquisition
and other direct costs that can be directly attributed, or allocated on
a reasonable and consistent basis, to creating, producing and making
the asset ready for its intended use.
Depreciation
Depreciation on the Tangible Fixed Assets of the Company is provided on
Straight line method as per Schedule XIV of the Companies Act, 1956 are
considered as the minimum rate. Individual assets acquired for less
than Rs. 5,000 are entirely depreciated in the year of acquisition.
The cost of and the accumulated depreciation for fixed assets sold,
retired or otherwise disposed off are removed from the stated values
and the resulting gains and losses are included in the profit and loss
account. Lease payments under operating lease are recognised as an
expense in the profit and loss account. An impairment loss is
recognized wherever the carrying amount of the fixed assets exceeds its
recoverable amount.
2.5 Foreign Currency transactions and translation
Transactions in foreign currency are recorded at exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
denominated in foreign currency are translated at the rate of exchange
at the balance sheet date and resultant gain or loss is recognized in
the profit and loss account. Non-monetary assets and liabilities are
translated at the rate prevailing on the date of transaction.
2.6 Taxes on Income
Tax expense for the year comprises of current tax, deferred tax.
Income taxes are computed using the tax effect accounting method, where
taxes are accrued in the same period in which the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
alternate tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of adjustments of future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal tax after the tax holiday
period. Accordingly, it is recognized as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Company and the asset can be measured reliably.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount being considered. The tax effect is
calculated on the accumulated timing differences at the end of the
accounting period based on prevailing enacted or substantially enacted
regulations. Deferred tax assets are recognized only if there is
virtual certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
2.7 Earnings per share
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extra-ordinary /
exceptional item is considered. The number of shares used in computing
basic earnings per share is the weighted average number of shares
outstanding during the period. The number of shares used in computing
diluted earnings per share comprises the weighted average shares
considered for deriving basic earnings per share, and also the weighted
average number of equity shares that could have been issued on the
conversion of all dilutive potential equity shares. The diluted
potential equity shares are adjusted for the proceeds receivable, had
the shares been actually issued at fair value (i.e. the average market
value of the outstanding shares).
dilutive potential equity shares are deemed converted as of the
beginning of the period, unless issued at a later date.
2.8 Retirement benefits to employees
Gratuity
The Company provides for gratuity, a defined benefit retirement plan
covering eligible employees, based on actuarial valuation made by an
independent actuary as at the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the gratuity plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employees' salary and the tenure of employment.
Provident Fund/ESI
Contributions to defined Schemes such as Provident Fund/ESI are charged
as incurred on accrual basis. Eligible employees receive benefits from
a provident fund, which is a defined contribution plan. Aggregate
contributions along with interest thereon are paid at retirement,
death, incapacitation or termination of employment. Both the employee
and the Company make monthly contributions to the government
administered authority.
2.9 Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset (including goodwill) may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognized in the profit and loss account. If at
the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount. An
impairment loss is reversed only to the exxtent that the carrying
amount of asset does not exceed the net book value that would have been
determined; if no impairment loss had been recognized.
2.10 Segment Accounting Polices
(a) Segment Assets and Liabilities:
The assets of the Company are used interchangeably between segments,
and hence the assets and liabilities of the Company are currently
treated as inseparable.
(b) Segment Revenue and Expense:
The Revenue and direct cost, excepting the unallocable costs like
personnel cost for the supporting services, depreciation, operating
expenditure, interest income on deposits, provision for contingencies
and income tax, are directly attributed to the respective segments.
2.11 Provision and Contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made. Provisions for
onerous contracts, i.e. contracts where the expected unavoidable costs
of meeting the obligations under the contract exceed the economic
benefits expected to be received under it are recognised when it is
probable that an outflow of resources embodying economic benefits will
be required to settle a present obligation as a result of an obligating
event, based on a reliable estimate of such obligation.
Jun 30, 2009
1. Company overview
Serve All Enterprise Solutions Limited, "the Company" is an Information
Technology services provider dedicated to serving the midsize market of
enterprises and the midsize units of Global 2000 enterprises across the
spectrum of business industries.
2. Significant accounting policies
2.1 Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles ("GAAP") under the historical
cost convention on the accrual basis. GAAP comprises mandatory
accounting standards as specified in the Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Indian
Companies Act, 1956. Accounting policies have been consistently applied
except where a newly issued accounting standard is initially adopted or
a revision to an existing accounting adopted or a revision to an
existing accounting standard requires a change in the accounting policy
hitherto in use. The management evaluates all recently issued or
revised accounting standards on an ongoing basis.
2.2 Use of estimates
The preparation of the financial statements in conformity with GAAP
requires Management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent assets and liabilities as at the date of the financial
statements and reported amounts of income and expenses during the
period. Actual results could differ from those estimates. Examples of
such estimates include provisions for doubtful debts, future
obligations under employee retirement benefit plans, income taxes, and
the useful lives of fixed assets and intangible assets. Management
periodically assesses using, external and internal sources, whether
there is an indication that an asset may be impaired. Impairment occurs
where the carrying value exceeds the present value of future cash flows
expected to arise from the continuing use of the asset and its eventual
disposal. The impairment loss to be expensed is determined as the
excess of the carrying amount over the higher of the assets net sales
price or present value as determined above. Contingencies are recorded
when it is probable that a liability will be incurred, and the amount
can be reasonably estimated. Where no reliable estimate can be made, a
disclosure is made as contingent liability. Actual results could differ
from those estimates.
2.3 Revenue recognition
Income from Software services and products. Revenue from professional
services consist primarily of revenue earned from services performed on
a "time and material" basis. The related revenue is recognized as and
when the services are performed. The Company also performs time bound
fixed-price engagements, under which revenue is recognized using the
percentage of completion method of accounting. The cumulative impact of
any revision in estimates of the percentage of work completed is
reflected in the year in which the change becomes known. Provisions
for estimated losses on such engagements are made during the year in
which a loss becomes probable and can be reasonably estimated.
Amounts received or billed in advance of services performed are
recorded as advance from customers/unearned revenue. Unbilled revenue,
included in debtors, represents amounts recognized based on services
performed in advance of billing in accordance with contract terms.
Revenue from the sale of user licenses for software applications is
recognized on transfer of the title in the user license, except in case
of multiple element contracts requiring significant implementation
services, where revenue is recognized as per the percentage of
completion method.
Revenues are stated net of discounts and include expenses billed to the
customers.
Interest income is recognized using the time proportion method, based
on the transactional interest rates.
2.4 Fixed Assets
Tangible assets
Tangible assets are stated at actual cost less accumulated
depreciation. The actual cost capitalized includes material cost,
freight, installation cost, duties and taxes, finance charges and other
incidental expenses incurred during the construction/installation
stage.
Intangible assets
Intangible assets are recorded at consideration paid for acquisition
and other direct costs that can be directly attributed, or allocated on
a reasonable and consistent basis, to creating, producing and making
the asset ready for its intended use.
Depreciation
Depreciation on the Tangible Fixed Assets of the Company is provided on
Straight line method as Schedule XIV of the Companies Act, 1956 are
considered as the minimum rate.. Individual assets acquired for less
than Rs. 5,000 are entirely depreciated in the year of acquisition.
The cost of and the accumulated depreciation for fixed assets sold,
retired or otherwise disposed off are removed from the stated values
and the resulting gains and losses are included in the profit and loss
account. Lease payments under operating lease are recognized as an
expense in the profit and loss account. An impairment loss is
recognized wherever the carrying amount of the fixed assets exceeds its
recoverable amount.
2.5 Foreign Currency transactions and translation
Transactions in foreign currency are recorded at exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
denominated in foreign currency are translated at the rate of exchange
at the balance sheet date and resultant gain or loss is recognized in
the profit and loss account. Non-monetary assets and liabilities are
translated at the rate prevailing on the date of transaction.
2.6 Taxes on Income
Tax expense for the year comprises of current tax, deferred tax and
Fringe Benefit Expense.
Income taxes are computed using the tax effect accounting method, where
taxes are accrued in the same period in which the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed, after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowances or other matters is probable. Minimum
alternate tax (MAT) paid in accordance with the tax laws, which gives
rise to future economic benefits in the form of adjustments of future
income tax liability, is considered as an- asset- ifà there is
convincing-evidence that the Company will pay normal tax after the tax
holiday period.
The differences that result between the profit considered for income
taxes and the profit as per the financial statements are identified,
and thereafter a deferred tax asset or deferred tax liability is
recorded for timing differences, namely the differences that originate
in one accounting period and reverse in another, based on the tax
effect of the aggregate amount being considered. The tax effect is
calculated on the accumulated timing differences at the end of the
accounting period based on prevailing enacted or substantially enacted
regulations. Deferred tax assets are recognized only if there is
virtual certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
Consequent to the introduction of Fringe Benefit Tax (FBT) effective 1
April, 2005, in accordance with the guidance note on accounting for
fringe benefits tax issued by the ICAI, the Company has made provision
for FBT under income taxes.
2.7 Earnings per share
In determining earnings per share, the Company considers the net profit
after tax and includes the post tax effect of any extra-ordinary /
exceptional item is considered. The number of shares used in computing
basic earnings per share is the weighted average number of shares
outstanding during the period. The number of shares used in computing
diluted earnings per share comprises the weighted average shares
considered for deriving basic earnings per share, and also the weighted
average number of equity shares that could have been issued on the
conversion of all dilutive potential equity shares. The diluted
potential equity shares are adjusted for the proceeds receivable, had
the shares been actually issued at fair value (i.e. the average market
value of the outstanding shares). Dilutive potential equity shares are
deemed converted as of the beginning of the period, unless issued at a
later date.
2.8 Retirement benefits to employees
Gratuity
The Company provides for gratuity, a defined benefit retirement plan
covering eligible employees, based on actuarial valuation made by an
independent actuary as at the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the gratuity plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employees salary and the tenure of employment.
Provident fund
Contributions to defined Schemes such as Provident Fund are charged,as
incurred on accrual basis. Eligible employees receive benefits from a
provident fund, which is a defined contribution plan. Aggregate
contributions along with interest thereon are paid at retirement,
death, incapacitation or termination of employment. Both the employee
and the Company make monthly contributions to the government
administered authority.
2.9 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset (including goodwill) may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs. If such recoverable amount of the
asset or the recoverable amount of the cash generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognized in the profit and loss account. If at
the balance sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount. An
impairment loss is reversed only to the extent that the carrying amount
of asset does not exceed the net book value that would have been
determined; if no impairment loss had been recognized.
2.10 Segment Accounting Policies
(a) Segment Assets and Liabilities
The assets of the Company are used interchangeably between segments,
and hence the assets and liabilities of the Company are currently
treated as inseparable.
(b) Segment Revenue and expenses
Revenue and direct cost, excepting the unallocable costs like personnel
cost for the supporting services, depreciation, operating expenditure,
interest income on deposits, provision for contingencies and
income-tax, are directly attributed to the respective segments.
2.11 Provision and Contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made. Provisions for
onerous contracts, i.e. contracts where the expected unavoidable costs
of meeting the obligations under the contract exceed the economic
benefits expected to be received under it are recognised when it is
probable that an outflow of resources embodying economic benefits will
be required to settle a present obligation as a result of an obligating
event, based on a reliable estimate of such obligation.